• 5 money blunders to avoid



    People, regardless of their status, job description and educational attainment, can potentially fall prey to money blunders that are camouflaged as harmless but apparently painful once revealed.

    Here are some common money blunders that people like you and me often ignore and can cause a tremendous strain in our financial life.

    1. The “cashless” society trap. While it is true that buying something using our credit card offers convenience and freebies, it also encourages us to spend that which we haven’t earned yet and the scariest part is, we sometimes spend beyond what we can truly afford. If you can limit the use of your credit card and have the discipline to pay the amount owed in full every month then we don’t have a problem, but the reality is most people are drawn to paying only the minimum monthly payment and complain that their credit card bills keep on piling up. Remember that your interest charges are based on your average daily balance, which means as long as you carry a balance, an interest is being levied upon you. A 3 percent monthly interest rate may look minimal but if you have this for a full year, then you’re actually paying 36 percent or even more.

    2. Emotional splurges. Majority of the decisions that we make based on emotions will lead us into a financial disaster. How often do we hear people shop when they’re stressed or heartbroken? Sure, shopping will take your mind off from your problem for the moment but once you get home and unpack your paper bags, you’ll still feel the loneliness and emotional pain. Worse, you let your pocket bleed as well. Splurging because you’re emotionally battered will not solve the problem rather it will create another problem, a financial problem! Seek other venues where you can vent out your frustrations and pains; talk to your family, friends and people who can help you bounce back. This not only saves your penny but leads to a stronger bond with people who truly care for you. The same is true when purchasing financial products—don’t invest in something just because your neighbor told you that he recently got one. People are unique as to their financial plans. Educate, investigate and assess if a financial product is aligned with your goals.

    3. No sense of urgency. We all love to put off tasks for a later time. I think it is human nature to procrastinate. That must be the reason why deadlines were invented. We tend to postpone completion of our school project until our teacher gives us a deadline; we work fast when our boss tells us that he needs our report before the end of the day, we turn off the alarm clock, ignore the time and set it for another five minutes until our roommate screams you’re late! The list goes on. The fact is in our financial life no one will set the deadlines for us, our roommate will not wake us up and say you’re late in putting your finances in order. We have to learn to put deadlines and timelines for ourselves. Don’t commit the mistake of saying “I’ll just save on the next pay day,” “I’ll just start my investment account next year, I’m too young for that.” Time flies like a bullet train, one day you wake up and you’re already in your 30s, or 40s and even half a century old without a dime in your savings account.

    4. Not having enough or any insurance coverage. Whether it’s our home, car, health or ourselves, we need a degree of financial protection to offset the economic burden from a possible catastrophic event that might happen in the future. If you can honestly say that you’re disaster-proof then I rest my case. But the reality is we don’t possess the power to predict the future, thus, having enough insurance coverage is the most responsible thing to do in order to prepare for unfortunate events.

    5. Money being the topmost priority. Try to recall and imagine the first time you stepped into your office, your hair neatly combed and your dress shirt well pressed, then while praying so hard that you get the job so you can provide well enough for your family, you handed over your resume to the straight-faced recruitment officer. Sometimes, working too hard for money overshadows our real goals in life. Sure, money can provide us a lot of things but making money is not just the purpose why we work. Rather, work is a vehicle to take us to our goal. Focusing too much on money can leave us blinded with the things that are more significant like our families, friends, life partners and even our health. When was the last time you took a break and carried your kid? Or stopped for a while and appreciated your spouse? A simple step back to see the whole picture can provide a helpful nudge to embrace what really matters to you. Keep your financial house in order while ensuring that your relationship at home is also intact.

    The journey to financial stability offers different kinds of pitfalls, roadblocks and curves but identifying these challenges early on, accepting their existence and learning from them can give us a sizeable lead in our journey.

    Jesi Bondoc is a Registered Financial Planner of RFP Philippines. He is the Director of My Wealth MD and Partners, Inc. specializing in investment advisory and oversight. You can send your money questions at jj_bondoc@yahoo.com or jbondoc@mywealthmd.com and they’ll be answered on his next article. For more info about Registered Financial Planner program, e-mail to info@rfp.ph or text <name><e-mail> <RFP> at 0917-9689774.


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